Survey Says?! Too Little, Too Late

Lets have another quiz. The above chart illustrates ...

a. Reaction to last night's State of the Union address
b. The results of the IN VIVO Blog poll about Schering-Plough and Merck's reaction to critics of the Enhance study
c. Both

Lets not get too carried away though. Although we all know that you IVB readers are smarter and better informed than your average bear, only a very small minority of you (compared to how many visits the site gets) decided to vote. Slackers!

(It'll take a whole mouse-click but if you can muster up the energy you can find our ongoing Vytorin coverage here.)

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Deals of the Week: Beyond Vytoringate

The sky is falling! The sky is falling! It sure seems that way this January Friday morning. Global markets slid early in the week thanks to a certain R-word and its association with the US economy. Meanwhile, in pharma land the brouhaha over Vytorin data--or lack thereof--has officially morphed into a scandal, with the addition of the "gate" suffix. (Take our poll!)

As of Thursday, both houses of Congress had initiated investigations, pressing Merck and Schering-Plough for information on the timing of executive stock sales in the wake of the delayed release of results from the so-called ENHANCE trial. Adding to the bad news, comes this New York Times report, which draws the American Heart Association--remember, the group came to the defense of Vytorin just last week--into the scandal thanks to financial ties to both companies.

In the wake of such scrutiny, it's not surprising that Vytorin prescriptions have fallen. Any doubt that these two pharmas have a serious image problem should be erased by this spoof from YouTube, where the omniscient narrator voices, "Nobody knows if Vytorin is safe or effective, but with enough scientific fraud, we can sure make it look like it is."

2008 is off to a great start. Thank goodness for Deals of the Week, where we promise not to mention Vytorin, Merck, or Schering Plough again--at least in this edition.



Teva/Cogenesys: On Tuesday, the Israeli generic drugs company announced it's acquisition of Cogenesys, the albumin fusion technology play spun out of Human Genome Sciences in 2006, for $400 million. Yet again, proof of a trend we've detailed several times: pharmaceutical firms continue to bulk up their large molecule capabilities. But for generics giant Teva, this deal is as much about deepening its stake in the ill-defined, yet surely valuable, follow-on biologics arena as is it about biologics capabilities per se. And that got us thinking. How much different is this deal, really, than Glaxo's take-out of Domantis, BMS's buy-out of Adnexus, or Wyeth's acquisition of Haptogen? Pharma's made a tremendous amount of money on next-generation (or me-too) small molecules. Stands to reason that as these firms jump into biologics, this might be just the space to play in--after all, new technologies allow the pharmas the opportunity to create IP-protected versions of existing large molecules that have largely been derisked. (Note: It's probably a good thing for Cogenesys that Teva inked the deal Tuesday not Wednesday. On Wednesday came news that HGS's own albumin-fusion protein, Albuferon for the treatment of Hepatitis C, may have adverse lung-related side-effects when dosed at the 1200 microgram level. HGS says it will shift patients in the Phase III trial to a 900 microgram dose biweekly and still expects to have late-stage data on the drug by spring 2009, with a marketing application to follow later that year.)

Roche/Ventana: Requited love--isn't it romantic? On Tuesday,came the news that after attempting to pledge its troth five times--and upping its share price to $89.50--Roche finally won Ventana's hand. We advised Ventana to take the outsized $75-a-share price late last summer, as $3 billion for a company with no near-term products seemed an outrageous return. Looks like we were wrong. That extra few months of wrangling won Ventana shareholders an extra $400 million in value, with the purchase price coming very close to the $90-per-share target Ventana CEO Gleeson had been gunning for all along. But even this happy news hasn't quelled the on-going rumor-mill. Forbes is reporting that although Ventana’s board has approved the deal it was over the objections of Chairman Jack Schuler and Vice Chairman John Patience. Neither have agreed to sell their shares to Roche. That’s 12% against the deal. Larry Feinberg, manager of the $1 billion Oracle Partners hedge fund owns another 8% of Ventana’s stock. He started buying in 1999 and tells Forbes: “My strategy has been to go along with those guys.”

Estee Lauder/Allergan: Last week the self-help guide "How Not to Look Old” made its debut on the New York Times best-seller list at No. 8 in the advice and how-to category, proof that the quest for eternal youth remains a constant in our society. This week comes news that Estee Lauder Cos' Clinique Laboratories is teaming up with Allergan to develop and market a new up-scale skin care line that will only be available from physicians. The new line will be priced at a premium compared to both Clinique's retail products and Allergan's physican dispensed offerings, which include Prevage MD and Forte. "The big idea here was: How do we become a leader in skin care?" says Allergan's CEO David Pyott. Allergan, is of course, the company that brought the world Botox, and has been a leader in showing the world how lucrative it can be to blend cosmetics with aesthetic medicine.

Forest/Novexel: Forest Laboratories plans to shell out $109.5 million in up-front fees to license North American rights to Novexel's preclinical intravenous beta-lactamase inhibitor, NXL104, which is being developed in combination with Forest's ceftaroline. (For those who don't remember, Forest acquired that product as a result of its 2006 acquisition of Cerexa.) If development work bears fruit--the combination is scheduled to enter the clinic in 2009--Forest will owe an additional $109.5 million. In addition, Forest also won first negotiation rights on another combination antibiotic--NXL104 plus ceftazidime, another cephalosporin with a slightly different activity spectrum compared to ceftaroline. This is the seventh major in-licensing deal for Forest in the last two years. While other pharmas have looked to biologics and other novel technologies to rejuvenate their pipelines, Forest is proving it has the know-how to license and succeed with primary care products, from anti-infectives to hypertension medicines such as Daiichi Sankyo's Azor to irritable bowel syndrom drugs such as Microbia's linaclotide. In other words, this spec pharma is proving it can succeed in big pharma's sandbox. For more on Forest's efforts in the primary care space check out this article from the December issue of The RPM Report.

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The Best Defense Is a Good Offense, Or Something Like That

Merck and Schering-Plough put out a release a few minutes ago responding to critics of ENHANCE and the trial results' fallout:

WHITEHOUSE STATION, N.J. & KENILWORTH, N.J.--(BUSINESS WIRE)--Merck and Schering-Plough said today that they strongly object to mischaracterizations about the ENHANCE (Effect of Combination Ezetimibe and High-Dose Simvastatin vs. Simvastatin Alone on the Atherosclerotic Process in Patients with Heterozygous Familial Hypercholesterolemia) trial. “While the ENHANCE trial was time consuming and took longer than originally anticipated to complete, our companies acted with integrity and good faith in connection with the trial. We took numerous actions to assure the quality of the reading of the ultrasound images,” said Thomas Koestler, Ph.D., president, Schering-Plough Research Institute.

And from there it gets more defiant. So, dear readers, what do you think? Read the whole release. Is this an effective defense for Merck and Schering-Plough? Please take our poll:

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Vytorin: In this Case, Best to Ignore History

Are the experts right? Or is this another example of the wisdom of crowds?

Analysts are pooh-pooh’ing the Vytorin/Zetia affair. Tim Anderson of Sanford Bernstein wrote that ENHANCE will “likely only have a muted impact on Vytorin prescription trends given the limitations of the study, but some prescriber business may be lost on the margin contingent on much negative coverage ENHANCE continues to receive.” Catherine Arnold at Credit Suisse in a note on Friday talked about investors reactions as “excessive and disengaged from the fundamentals.”

So far, the market isn't listening. Merck’s stock was down last week 10%; Schering-Plough’s 23%.

Docs aren’t paying attention to the analysts either. Daily data from ImpactRx show steep declines in new scrips. Notes ImpactRx analyst Bob Caprara: if you look at 2-day averages, Vytorin has lost 75% of its new patient starts and was still trending down last Friday. If you continue to draw that line, Vytorin could easily lose 35% of its 2008 projected sales, he says.

Admittedly, Caprara notes, that’s a big if. Schering and Merck might be able to counter the negative press. Arnold argues that “there are no sound historical comparisons for a drug coming under this much fire for a disappointing efficacy study, especially when the study looked at an unvalidated surrogate endpoint, tested the drug against a strong active comparator and showed equivocal results.”

Maybe. Other drugs have faced a barrage of criticism and recovered – most notably, as Arnold points out, AstraZeneca’s Crestor. But we’d submit the Vytorin situation is no Crestor redux, and Crestor’s antagonist, FDA's internal gadfly David Graham, is no Steve Nissen (we blogged about one of Nissen’s attacks on the drug here). In the first place, Graham could point to no single trial to define his point. Vytorin’s critics now can. And that woefully-late-to-report trial looks to those with a suspicious caste of mind (including the New York Times editorial page and US legislators) like it was suppressed.

Then there’s the lower-is-better argument that the drug industry has used so effectively to boost one statin over the previous while driving sales in the category beyond the wildest dreams of its creators – first Merck, with Zocor over Bristol-Myers’ Pravachol, then Pfizer, with Lipitor over Zocor, then AZ with Crestor over Lipitor; and now Merck and Schering with Vytorin over Lipitor and Crestor. When you think about it, there ain’t all that much data comparing head-to-head outcomes data on the most powerful drugs – Vytorin’s IMPROVE-IT trial vs. Zocor won’t report out till at least 2010; the Crestor vs. Lipitor study not until 2011. And while Arnold is right that the ENHANCE study focused on a surrogate endpoint – atherosclerosis as measured by intima-media thickening – it’s an endpoint a lot closer to a real clinical endpoint than mere cholesterol reduction.

But whether Vytorin sales slump permanently or not, the real message is that primary-care risk is now off the charts, exacerbated by Big Pharma’s addiction to DTC advertising. In fact, we think the risk will bite a virtually permanent discount from the share price of firms whose earnings now or will flow largely from primary care products, particularly those – like Vytorin – which treat asymptomatic diseases.

There are several reasons why. First, with the general lack of head-to-head outcomes data – and understandably little appetite among Big Pharma for financing it pre-approval –payors will increasingly look to switch their insured populations towards generics. And this is particularly easy with asymptomatic conditions like hypercholesterolemia because patients have very little practical reason to care. Their disease doesn’t hurt; the drugs provide a merely theoretical benefit. At least diet and exercise make you look better.

Second, these drugs are the easiest ones to attack. There are no patient cholesterol or hypertension or diabetes lobbies that can compete with breast cancer or AIDS or Alzheimer’s. The makers of the big primary-care drugs are easy targets for politicians – and evidently more frequent targets, too (thanks in part to the backswing of the double-edged DTC sword Big Pharma has been wielding so aggressively). Merck and Schering will be asked to explain themselves to Congress (and no doubt FDA will be obliged to hold an advisory committee as well). That means more headlines and more questions. As we wrote here, it won’t help that the Energy & Commerce Committee, which is investigating Vytorin, is also investigating Pfizer’s Lipitor DTC campaign.

And you add those headlines to the fact that the drugs don’t actually make people feel better – and a compliance problem the drug industry has always struggled with will grow worse.

Let us return to Catherine Arnold’s point: “there are no sound historical comparisons for a drug coming under this much fire for a disappointing efficacy study.” Exactly. History -- the rear-view mirror -- isn’t where we should be looking to understand the meaning of the Vytorin story.

Photo 'Crowd listening to T.R. speak, Chicago' from Library of Congress, via Flickr

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While You Were Losing Your Resolve

Allegedly this is the time of year that most of us begin to let those New Year's resolutions slip. (Already? Weak!) Trip to the gym or grab a beer to watch the conference championship games? We watched football--but then again we were smart enough not to make any resolutions this year. Pack and Charger fans, better luck next year.

Just a couple notes from a cold and quiet Sunday. If you're taking the day off in observance of Martin Luther King Jr. Day, enjoy the long weekend.

• Start saving for a super bowl ad: Merck and Schering-Plough defend Vytorin and Zetia in some full-page ads on Sunday. Will doctors and patients respond? We'll have some data on their early reactions to the Enhance kerfuffle later today.


• Lupus, unmasked: Scientists writing in the New England Journal of Medicine and Nature Genetics describe unearthing genetic variants in at least six distinct regions of the genome related to the autoimmune disease systemic lupus erythematosus. Reuters' roundup is here.

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The Man Pharma Loves to Hate

It’s the headline lay media outlets love to report: “High-Cost Cholesterol Drug Combo Shows No Benefit Over Lower-Cost Generic Statin.” From a health care reporter’s perspective, nothing is more juicy than a study that shows that a cheap generic drug is more effective than a expensive new medicine. Especially when the study is sponsored by a drug company.

And that story is made even better is when Steve Nissen goes on national television to say things like this: “My advice to physicians is to not use these drugs...for first-line indications anymore. These should really be relegated to drugs of last resort until we have some evidence that they produce a health outcomes benefit.”

But that’s exactly what happened to Merck and Schering-Plough’s hot new cholesterol combo, Vytorin. The drug, which combines another relatively new drug, ezetimibe (Zetia) with generic simvastatin, was found to have no effect on the accumulation of plaque in the arteries, and may even increase plaque growth.

Yikes. No wonder Schering and Merck waited two years to release those findings. Wall Street certainly showed its displeasure: Schering’s stock price fell 8% yesterday, and Merck’s shares slipped 1.3%. And Merrill Lynch downgraded its rating on Schering’s stock, from “buy” to “neutral.”

But Merck and Schering aren’t just in hot water with investors. The companies released the data after Bart Stupak (D-Mich.), chairman of the House Energy & Commerce Committee, opened an investigation into the delay. Now Stupak is sure to haul Merck and Schering executives up to Capitol Hill to testify at what surely will be a very public, very messy hearing.

“In light of today’s results, which were released nearly two years after the Enhance trial ended, it is easy to conclude that Merck and Schering-Plough intentionally sought to delay the release of this data,” Stupak said in the statement. Stupak, of course, was the man behind the Ketek hearings last spring, when FDA’s David Graham returned to Capitol Hill to revive his role as a drug safety whistleblower. So he’s not exactly friendly with Big Pharma.

That’s all bad enough for Schering and Merck. But Nissen, head of cardiology at the Cleveland Clinic, twisted the knife in a bit deeper, appearing in virtually all major news outlets to blast the efficacy of Vytorin and Zetia. (In fact, we would challenge anyone to find a major news story that didn’t quote Nissen.)

Nissen became the go-to guy on cardiovascular drug safety following his unauthorized meta-analysis of GlaxoSmithKline’s Avandia data. With Vyotrin, he adds the mantle of Dr. Efficacy. Here’s what he told NBC’s Today show: “It was a shocking result for the medical community, and it suggests that this mechanism of cholesterol lowering produced by Vytorin and Zetia is simply ineffective at providing any benefits to patients.”

It was comments like those that led to the anti-Merck and Schering “hysteria” on Wall Street, according to Sanford Bernstein analyst Tim Anderson. “In isolation,” Anderson says, “the results probably would have led to a share price rise for SGP and MRK, but largely due to negative comments from prominent cardiologist Steve Nissen, share prices declined.” (Well, either that or analysts underestimated, and continue to underestimate, how bad these results really are--particularly for Schering-Plough, and especially as those same analysts estimate that "about 70 percent of Schering’s earnings depend on Zetia and Vytorin," according to this morning's New York Times.)

Either way, the reaction confirms our belief that Steve Nissen has become a pretty powerful force, and why our colleague, Ramsey Baghdadi, labeled him as a “serial drug killer.” (For Ramsey’s profile of Nissen in The RPM Report, you can find it here. Those who aren’t yet subscribers can sign up for a free trial to read the story.)

There is an important distinction in Nissen’s role in Avandia and Vytorin: he isn’t taking down Vytorin with his own analysis, but using the visibility gained from Avandia to publicize what he sees as a drug that provides minimal efficacy. But given the sharp drop-off in Avandia prescriptions after Nissen got involved, you can guess where Vytorin and Zetia scripts may be headed—especially once AstraZeneca (Crestor) and Pfizer (Lipitor) start using the data in sales calls.

And finally, for those of you that thought the DTC advertising nightmare was somewhat over, think again. Here’s Nissen on Katie Couric’s “Eye to Eye” last night: “We see no evidence of benefit from this very heavily advertised, very heavily used medication.” If that's not an open invitation for more attention from Capitol Hill, we don't know what is.

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Nissen Weighs in on ENHANCE

You know what he's going to say ...



Remind you of this?

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While You Were at AHA

Well, the big prasugrel v clopidogrel showdown went down pretty much how observers expected it would: Lilly's prasugrel has the edge in efficacy--cutting heart attacks by 24% over Bristol/Sanofi's Plavix--but comes with an increased risk of bleeding. The press release is here. The WSJ covers the news here. We'll probably have more on this later.

• In other AHA news, Integrilin: a little jab'll do ya. Probably not great news for Schering-Plough, which, unsurprisingly, did not fund the study that suggested angioplasty patients do just as well with a significantly smaller dose of the drug.


• The New York Times chronicles Pfizer's fight to protect its Lipitor franchise from incursion by generic simvastatin. As the Financial Times pointed out last week, AstraZeneca has its own simvastatin-induced challenges with its blockbuster statin Crestor.


• GSK's gepirone antidepressant received a non-approvable letter from FDA. This is the third time FDA rejected gepirone, previously under development at Akzo Nobel (Organon), so not exactly a shocker.


• A study in Nature published on Sunday describes a new lung cancer target. Mutations in NKX2-1, which controls the activity of alveoli, may be responsible for up to 12% of lung cancers, according to researchers led by Matthew Meyerson of the Dana-Farber Cancer Institute and the Broad Institute. Reuters has the story.


• The Boston Globe looks at MIT professor Lenny Guarente's dormant relationship with Elixir Pharmaceuticals, the about-to-go-public company he founded in 1999, and his potential relationship with Elixir competitor Sirtris Pharmaceuticals.

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Schering-Plough's Wake Up Call

Separated at birth? Sugammadex versus Suge Mug Shot

Talk about a real sleeper. Wall Street analysts are starting to buzz about one Phase III project Schering-Plough will be acquiring as a part of its $14 billion acquisition of Organon. But this is definitely not the kind of product that usually merits spotlight coverage in research notes.

The unlikely pipeline star? The neuromuscular blockade reversal agent sugammadex, a product used post-surgery to counter the effects of neuromuscular blocking agents in anesthesia. The buzz started earlier this year with the publication of an article in Anesthesia & Analgesia suggesting that it would revolutionize anesthesia care. And it continued with the release of data at this week’s American Society of Anesthesiologists meeting. (You can bet no one sleeps through the plenary sessions at that one.) [ed. note: hey-o!]

Credit Suisse’s Catherine Arnold, for one, liked what she saw. “Sugammadex continues to impress,” she wrote in an October 16 note reiterating her “outperform” rating on Schering.

“We continue to feel that this is an exciting product that could revolutionize the practice of anesthesia,” Arnold writes.

“It has clinical advantages: providing faster, more consistent reversal of neuromuscular blockade induced by a variety of agents and no anticholinergic side effects as compared to the current reversal agents. Further, it has a pharmacoeconomic advantage: allowing patients to be transferred out of the
operating room or recovery room more quickly post-op… We continue to feel that investors are under-appreciating sugammadex’s potential.”

Sounds like a great opportunity. So how big will it be? Arnold estimates it will reach sales of $700 million in 2015.

Huh? All this buzz over a product that won’t reach a billion dollars in revenues eight years from now? Has Wall Street lost its mind?

We don’t think so. Instead, sugammadex is exactly the type of mini-buster Big Pharma is going to have to rely on in the future as the entire industry adjusts to the post-blockbuster world. There haven’t been a whole lot of products bigger than $700 million at peak coming out of Big Pharma in recent years—and the new FDA drug safety law means there will be even fewer. (Why? Start here.)

Given that reality, submarkets that pharma has bypassed for the past decade are starting to look more attractive. That is a key part of sugammadex’ appeal: it will be sold exclusively to hospitals. That has not been a major focus for most of Big Pharma, but Arnold notes that it has a big virtue—it can be served with a relatively small commercial infrastructure. (For good measure, Arnold observes, Schering isn’t the biggest of Big Pharmas either, so $700 million goes farther. She points out that it takes only $16 million in net income to add a penny to SGP’s EPS.)

During Windhover’s Pharmaceutical Strategic Alliances conference last month, I pointed out another reason it is smart for Schering to move into the hospital market: it relies on a completely different payment system than the primary care market. [This presentation will be available to download as a podcast from IN VIVO Blog shortly.]

For years that has been a big reason most Big Pharma’s stayed out of the hospital sector. Hospital payments are essentially capitated by the Medicare Part A program, making it extremely difficult to launch premium priced products. That’s why sugammadex’ pharmacoeconomic data will be so critical. If Schering can show it saves hospitals money, uptake will be simple. But if sugammadex costs too much upfront, or puts hospitals at risk of losing money on routine surgical procedures, no amount of superior clinical data will help it.

For more than a decade, most companies have preferred pricing flexibility over demonstrating pharmacoeconomic advantages. But now they don’t really have a choice, not now that the government and its private plan surrogates are starting to exert more influence over outpatient drugs through Medicare Part D.

It is no longer a question of whether to operate in a government influenced market, but instead a question of which one: the “old” Medicare, administered directly by the feds; or “new” Medicare, run by private intermediaries. There are plenty of reasons to choose one market over the other, and Big Pharma in particular has lots of reasons to prefer the Part D system which at least fragments the market to ensure there are no make-or-break coverage decisions coming out of Washington.

But why choose? Uncle Sam’s money is paying the bills both ways, so the smart play is to dip into both streams.

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Smaller Big Pharma and the Hybrid Future

Two R&D Heads are better than one

[Updated below.] Today's final panel at PSA featured the heads of R&D at two of the industry's smaller Big Pharma, Tom Koestler, PhD, EVP and president of Schering Plough Research Institute and Elliott Sigal, MD, PhD, EVP, CSO, and president of R&D at Bristol-Myers Squibb Co.

Sigal suggested the industry's challenges in R&D would be best met by a best-of-both-worlds solution: "Some people in large pharma say, 'I want to be a biotech company', but that's not necessarily a good idea. You need to pick the best of pharma and the best of biotech and move on to a next-generation model," he said. Big biotech, like Amgen and Genentech, similarly need to adopt small-molecule strategies to thrive in the longer term, he noted.

BMS has employed this very strategy, embracing biotech risk hedging strategies in its blockbuster deals with Pfizer and AstraZeneca this year (we wrote about those deals here and here). Tom Koestler noted that Schering-Plough has maintained a handful of joint venture agreements to spread risk--notably that company's cardiovascular partnership with Merck, an asthma and COPD deal with Novartis, and its large-molecule JV with Johnson & Johnson (think Remicade).

So what's it take to embrace this hybrid model? A realization that complete vertical integration is not only not necessary, but perhaps detrimental. Co-development and co-commercialization deals, targeted approaches to geography and customers, streamlining manufacturing, and innovative sales and marketing approaches are all part of the model, according to Sigal. If you've got enough opportunities, why not de-risk the portfolio in high risk or expensive areas like metabolic disease?

"We need a new business model, an evolving business model, and R&D needs to evolve in that direction," Sigal said. "You're never too big that you can't benefit from a good collaboration."

UPDATE: For a look at the WSJ Health Blog's coverage of Koestler and Sigal's talks, click here.

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Once in a Blue Moon: SGP's Stock Offering

When everyone and their pharmaceutical brother decides it's time to buy back their own stock, leave it to Schering-Plough to buck the trend.

The Big Pharma, fresh off the news it had emerged from the five-year old consent decree after righting all the wrongs at two manufacturing facilities ($500 million for the poorer, though), said it was selling a boatload of stock. The proceeds of this expected offering will cover some of the expense of its $14.5 billion cash takeout of Organon BioSciences, announced earlier this year (we covered the acquisition in depth, here).

The move marks the first time in months years decades? that a Big Pharma has decided to sell common stock to public investors (there have been plenty of debt financings and lots of cash raised via many divestments and spin offs, but zero equity offerings in a very long time as far as we can tell).

Schering-Plough is selling 50 million common shares (plus up to 7.5 million more in the greenshoe), which at yesterday's close would rake in nearly $1.5 billion toward the Organon tab. Simultaneously the company said it would sell $2.5 billion in convertible debt.

The fact is that Big Pharma rarely need to dilute shareholders since debt is readily available and they are often sitting on piles of cash that -- thanks to strong cash flow and goofy measures like the American Jobs Creation Act (oh yeah, how'd that go?) -- can resemble some of the minor peaks in the Alps. In fact most go out of their way to appease shareholders by buying back shares, the wisdom of which we question here.

But Schering-Plough has enjoyed success of late with Vytorin and Zetia, and has been growing both its top and bottom line nicely--so why not take advantage?

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Schering-Plough Spends Big on Organon

$14.5 billion sure doesn't go as far as it used to.

Schering-Plough announced in the wee hours of Monday morning that it would spend that amount to acquire Organon BioSciences, the biopharmaceuticals unit of the Dutch conglomerate Akzo Nobel NV. The price tag, at more than 4x Organon's 2006 sales, was a couple billion dollars higher than analysts expected for any trade sale or listing of the company. Akzo is now free to focus on its chemicals and paints businesses, and the sale has already sparked rumors that it would seek to spend its Organon proceeds on buying companies in those spaces.


Organon, which specializes in women's health and CNS disorders, was slated to IPO on Euronext later this month, and was rumored to be entertaining private equity offers for the business. Those rumors prompted a few 'reconfirmations' that an IPO was still in the offing--basically indicating the offers to buy Organon weren't sweet enough.

So what is Schering-Plough getting for its hard-earned cash? It's hard to believe that the acquisition will vault the company back into the top tier of Big Pharma companies, though it may dissuade others from attempting their own takeover bids of the NJ firm. Organon's forte is contraceptives, though that business isn't exactly booming.

Analysts have suggested that perhaps Schering-Plough attaches more value to Organon's CNS projects than the market does (or for that matter than Pfizer does--Pfizer returned to Organon rights to the Phase III antipsychotic asenapine late in 2006, when the drug disappointed in a pivotal trial). Perhaps, though Organon's track record in pivotal trials has not been sterling over the past few years. Organon has recently rebooted itself as a biologics focused firm--adding an R&D facility the Boston area and signing a few early-stage deals--though those efforts will take years to come to fruition.

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